On Taxing the Rich, a Top Pol Breaks Ranks

March 10th, 2012

Published on Too Much*, by Sam Pizzigati, March 3, 2012.

A tax-the-rich bombshell has dropped in the presidential race. The French presidential race. But this bombshell’s blast will almost certainly reverberate elsewhere. Maybe even in the United States. Mainstream political leaders in the world’s developed nations have been suffering from political amnesia — on tax policy — for over 30 years now.  In the generation before 1980, the world’s top industrial nations routinely subjected their highest income brackets to tax rates as high as 70 and 80 and even 90 percent.   

But then conservatives swept to power in Britain and the United States — Margaret Thatcher in 1979, Ronald Reagan in 1980 — and obliterated steeply graduated progressive tax rates. By 1986, no dollar of income that America’s richest reported would face more than a 28 percent tax rate. In the UK, the top rate would plummet from 83 to 40 percent … //

… In mainstream political circles, a 50 percent top tax rate simply seemed the absolute upper limit on the politically possible. Until last week.

Last Monday, in a national TV interview, the candidate that public opinion polls have leading the French presidential race called for a 75 percent super tax on all individual income over $1 million euros, the equivalent of about $1.33 million.

On the network news program Parole de Candidat, French Socialist Party presidential standard-bearer François Hollande told the French people that he could not any longer “accept excessive wealth.”

“I appreciate the talent, work, merit of those who create and enable France to move forward,” Hollande continued. “I do not agree with excessive wealth — and compensation that has no connection with talent, intelligence, or effort.”

Hollande’s vow to enact a 75 percent top tax rate came as a complete surprise — even to his budget adviser. And French conservatives immediately rushed to blast him. The right-wing daily Le Figaro declared that “war has been declared on ‘the rich.’” A top French business leader dubbed Hollande’s proposal “ridiculous.”

Hollande’s chief rival in this spring’s upcoming French presidential election, incumbent French president Nicolas Sarkozy, would be derisively dismissive.

“Not a single other politician in the world, not one, thinks this is a good idea,” Sarkozy intoned.

“And why not a 100 percent rate?” mocked Marine Le Pen, the presidential candidate of France’s ultra-right National Front … //

… France’s top expert on taxing the rich, Thomas Piketty of the Paris School of Economics, would like to see Hollande go beyond a “supplementary tax” and attempt an even more “daring” overhaul of French taxation.

But Piketty — a close colleague of the top U.S. tax-the-rich expert, Berkeley’s Emmanuel Saez — considers Hollande’s call for a 75 percent top rate “an important step” that “goes in the right direction.”

“Many countries,” Piketty noted last week, “are bound to follow this voice.”

The first round of France’s presidential voting will take place April 22. A May 6 run-off round will follow.

* (Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Institute for Policy Studies.
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